April 2016

JEWELRY INSURANCE ISSUES (formerly IM News), provides monthly insight and information for jewelry insurance agents, underwriters and claims adjusters.

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Jewelry Insurance Issues

Table of Contents

Click on article titles in red

2017

Moral Hazard, Documents and the Bottom Line - January

Ruby and Jade - February

How to mail a diamond - March

Jewelry Insurance Appraisal Standards: JISO - April

Describing a gem's color - May

Why not just put jewelry on the Homeowner policy? - June

GIA Diamond Reports - July

Not just a pretty face - August

Moral Hazards on the rise - September

Hurricanes, fires, floods—and jewelry insurance - October

2016

Inflated appraisals—alive & well! Shady lab reports—alive & well! MORAL HAZARD—ALIVE & WELL! - January

Clarity Enhancements v. Inherent Vice - February

How green is my emerald? - March

Cruise Jewelry - What's the problem? - April

Crown of Light®- how special is it? - May

Diamonds at Auction — Big gems, big prices, and the trickle-down effect - June

Are you sure her wedding jewelry is covered? - July

What Affects Jewelry Valuation? - August

What to look for – on the jewelry appraisal, on the cert, and on other documents - September

Bigger & Bigger Diamonds - October

Scam season is always NOW - November

Ocean Diamonds - December

2015

Pair & Set Jewelry Claims and the Accidental Tourist - January

Is that brand-name diamond a cut above the others? - February

Vacation Jewelry – Insurer beware! - March

Apple's Smartwatch – The risk of a wrist computer - April

Why you should read that appraisal - May

Smoking Gun! - June

Color-Grading Diamond: the Master Stones - July

Padparadscha—a special term for a special stone - August

Jewelry Appraisal Fees - September

Insuring a Rolex - steps to take, things to consider - October

Diamond camouflage and how to see through it - November

GIA Hacked! - December

2014

Who Grades? - January

Sales, discounts, price reductions, bargains, specials, mark-downs . . . . and valuation - February

Credential Conundrum - March

Frankenwatches - April

Fakes, fakes, and more fakes - May

Marketing Confusion — What is this gem anyway? - June

12 Reasons Not to Insure a Rolex! - July

Why NOT to insure a Rolex: Reasons 5-7 - August

Why NOT to insure a Rolex: Reasons 8-10 - September

Why NOT to insure a Rolex: Reasons 11-12 - October

The Doublet Masquerade - November

Is the gem suitable for the jewelry? Is this a good insurance risk? - December

2013

Wedding Rings on HO? NO! - January

Silver: the new gold - February

Point Protection - March

Tiffany v. Costco - April

What counts in valuing a diamond? - May

Appraising Jewelry - What's a credential worth? - June

A Cutting Question concerning vintage diamonds - July

Synthesized Diamonds - Scam update - August

Pretty in Pink - Kunzite on parade... - September

Preventing jewelry losses - October

Scratch a diamond and you'll find . . .??? - November

Synthetics in the Mix - December

2012

Advanced Gem Lab - A deeper look at colored gems - January

Whose Diamond? - February

Appraisal Inflation - It Keeps On Keeping On - March

Big Emerald - April

Changing colors and making gems: Are we seeing "beautiful lies"? - May

Diamonds - Out of Africa. . . or out of a lab? - June

Appraiser's Dream Contest - July

GIA & the Magic of Certificates - August

Pricey when it's hot: What happens when it's not? - September

Fooling With Gold - October

Tanzanite – December's stone - November

Branding Diamonds - What do those names mean? - December

2011

Unappraisable Jewelry - January

Replicas - Are they the real thing? - February

Composite Rubies- From bad to worse - March

Jewelry Hallmark - A Well-Kept Secret - April

Non-Disclosure: Following a Trail of Deception - May

Preserving the Diamond Dream - June

Spinel in the Spotlight - July

Jewelry 24/7 - Electronic Shopping - August

Diamond Bubble? - September

Disclosure: HPHT - October

"Hearts & Arrows" Diamonds - November

How a Gem Lab Looks at Diamonds - December

2010

Emeralds - And What They Include - January

Pink Diamonds: From Astronomical to Affordable - February

Palladium-the Other Precious White Metal - March

Bridal Jewelry - April

The Corundum Spectrum - May

How Photos Cut Fraud - and help the insured - June

The Price of Fad - July

Old Cut, New Cut-It's All about Diamonds - August

EightStar Diamonds-Beyond Ideal - September

The Hazard of Fakes - October

Jewelry with a Story - November

Counterfeit Watches - December

2009

Blue Diamond-cool, rare and expensive-sometimes - January

Turning Jewelry into Cash—
Strategy in a Bad Economy
- February

Enhancing the Stone - March

Being Certain about the Cert - April

Every Picture Tells a Story - May

Color-Grading Diamonds - June

The Newest Diamond Substitute - July

What Happens to Stolen Jewelry - August

Jewelry As an Investment - September

Black Diamond: Paradox of a Gem - October

Protect Your Homeowners Market—Keep Jewelry OFF HO Policies! - November

What’s So Great about JISO Appraisal Forms & Standards? - December

2008

Garnet - and Its Many Incarnations - January

Organic Gems - February

Do Your Jewelry Insurance Settlements Make You Look Bad? - March

Don't Be Duped by Fake JISO Appraisal - April

Diamonds in the Rough - May

The Cultured Club - June

Sapphire-Gem Superstar - July

It's a Certified Diamond! 
- But who's saying so?
- August

FTC Decides: Culture Is In! - September

Paraiba Tourmaline – What's in a Name? - October

How Fancy is Brown? - November

CZ – The Great Pretender - December

2007

Moissanite's New Spin - January

Online Jewelry - Buying and Insuring - February

Blood Diamonds - March

Damaged Jewelry, Don't Assume!- April

Chocolate Pearls - May

Appraisal Puff-Up vs Useful Appraisal - June

It's Art, but is it Jewelry?
- July

Diamonds Wear Coats of Many Colors - August

DANGER! eBay Jewelry "Bargains" - September

TV Shopping for Jewelry - October

Enhanced Emerald: clever coverup - November

How do you like your rubies -
leaded or unleaded?
- December

2006

The New Platinum: A Story of Alloys - January

Ruby Ruse - February

How Big are Diamonds Anyway? - March

GIA Diamond Scandal
Has Silver Lining for Insurers
- April

Watch Out for Big-Box Retailers Insurance Appraisals - May

Mixing It Up: Natural and Synthetic Diamonds Together - June

Tanzanite - Warning: Fragile - July

Red Diamonds - August

Inflated Valuations & Questionable Certificates - September

Emeralds - October

Where Do Real Diamonds Come From? - November

Counterfeit Watches - The Mushroom War - December

2005

The Lure of Colored Diamonds - January

Synthetic Colored Diamonds - February

Watches: What to Watch for - March

When is a Pear not a Pair? - April

The Truth About Topaz - May

White Gold: How White is White? - June

One of a Kind - or Not - July

Jewelry in Disguise - August

Valued Contract for Jewelry? Proceed with Caution! - September

Antiques, Replicas and All Their Cousins
October

Grading the Color of Colored Diamonds
November

New GIA Cut Grade for Diamonds - December

2004

Synthetic Diamonds - and Insuring Tips - January

Bogus Appraisals and Fraud - February

A Picture is Worth Thousands of Dollars - March

Don't be Duped by Fracture Filling - April

Gem Scams Point to Need for Change - May

What is a Good Appraisal - June

4Cs of Color Gemstones - July

Gem Laser Drilling: The Next Generation - August

Why Update an Appraisal? - September

When to Recommend an Appraisal Update or a Second Appraisal - October

Secrets of Sapphire - November

Will the Real Ruby Please Stand Up - December

2003

Mysterious Orient:
A Tale of Loss
- January

Bogus Diamond Certificates and Appraisals - February

Can Valuations be Trusted? - March

Spotting a Bogus Appraisal or Certificate - April

Counterfeit Diamond Certificates - May

Case of the Mysterious "Rare" Sapphires - June

Politically Correct Diamonds - July

Name Brand Diamonds - September

Princess Cut: Black Sheep of Diamonds - October

Reincarnate as a Diamond - November

Synthetic Diamonds - December

2002

Irradiated Mail/Irradiated Gems - January

Fake Diamonds (Moissonite) - February

GIA Diamond Report - March

AGS and Other Diamond Certificates - April

Colored Stone Certificates - May

Damaged Jewelry: Don't Pay for Nature's Mistakes - June

The Case of the "Self-Healing" Emerald - July

Mysterious Disappearance: Case of the Missing Opals - August

The Discount Mirage - September

What Can You Learn from Salvage? - October

Gaining from Partial Loss - November

Year in Review - December

2001

Colored Diamonds - January

Good as Gold - February

Disclose Gem Treatments - March

FTC Jewelry Guidelines - April

Myths Part I: Each Piece is Unique - May

Myths Part II: Myths, Lies, & Half-Truths - June

New Trend: Old Cut Stones - October

The Appraisal Process - November

Year in Review - December

2000

Deceptive Pricing - January

Gems - Natural or Manmade - February

Jeweler/Appraisal Credentials - March

Fracture Filling - April

Salvage Jewelery - May

Gem Treatments - June

Don't Ask/Don't Tell - A Buying Nightmare - July

Laser Drilling of Diamonds - August

Jeweler Ethics or the Lack Thereof - September

Gem Scam - October

The Truth about Clarity Grading - November

Year in Review - December

 

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Cruise Jewelry—What's the problem?


The day is beautiful, the jewelry is beautiful and, of course, the price is "discounted" – the VIP card from the ship's shopping consultant guarantees that.

So what's wrong with these purchases?

We've often warned insurers to be careful about covering jewelry bought on vacation, particularly jewelry bought on cruises. Here's some background to back up that warning.

The bigger picture

Each year an estimated 200 US cruise ships bring over 14 million tourists to island nations in the Caribbean and the Bahamas. Some of these islands are quite small, and cruise tourism is their only source of income. At each port of call, shops are the main sight and shopping often the only activity.



Popular cruise sites for jewelry buying

Jewelry is big business at these destinations. Shopping consultants on board ship stir up excitement in advance. There's likely to be a talk on some jewelry basics, such as the 4 Cs of diamonds. Shopping consultants distribute coupons from various stores for gifts like a free gemstone or free earrings.

The consultant promises to guide the passengers to the best shops. Jewelry prices can be very high, warns the consultant, but because of his connections he can bargain on the passengers' behalf. Once the travelers disembark, the expert guides them to certain shops, introduces them to this shop owner or to that special salesperson, and helps negotiate the final price for each purchase.

Passengers have the impression that the expert shopping consultants are employees of the cruise line. Actually the consultants are hired and trained by independent contractors who negotiate with shops to gain a commission on each sale they facilitate, and they pay the cruise line a percentage of their commission. The consultant's job is to help make sales happen.



One of 125 Diamond International locations

The shops, for their part, are up against stiff competition. High tourist seasons lasts only a few months, and in that time they must pretty much make their year's income.

They overprice jewelry because they know that cruise passengers are told to expect 70% discounts. From their profits they must pay commissions to the cruise consultants who bring customers to their shop. And they are in competition with each other, large international chains as well as mom-and-pop jewelry stores, so pressure is very high to sell sell sell.

A former shopping consultant who worked on cruise lines says that a jewelry shop along the cruise route has about 15 seconds to catch the attention of a tourist and start a dialog. The salesman's first step is to up-sell the free-gift coupon into a sale—say, by having the free gemstone put in a setting. Once that sale is closed, he'll quickly move on to more expensive pieces. He may mention to the customer that his store is approved and guaranteed by the cruise ship (which is not really the case, but the verbal assurance is part of the spiel).

Back on board, the customer is reminded to register her purchase with the ship in order to "activate the guarantee." What the registration really does is give the ship a way to keep track of expected commissions and to verify that the store is reporting all the sales.

There are also one or more jewelry stores on the ship—with overpriced jewelry. Colored gems are especially popular, and customers are often lured with free earrings or pendants. See our earlier issue on Vacation Jewelry, which highlights some of the colored gems commonly hyped on cruises and in other tourist locations.

On the way home the ship's store is likely to have a huge sale, offering passengers their end-of-vacation last chance to bring home a piece of jewelry. The special "discounted" price may prove to be what the jewelry is really worth—or it may not.



Luxury jewelry store aboard a cruise ship

Incredible jewelry selling machine

One former shopping consultant refers to these vacation cruises as an "incredible jewelry selling machine." The system has been going on for decades, and as cruise vacationers increase in number, so do jewelry stores along the route. Diamonds International—along with its sister stores, Tanzanite International and others—has 125 stores spread almost exclusively along the cruise routes.

Not all jewelry stores in these ports artificially inflate prices and pay commissions to shopping guides, but they are all in competition for sales. What all the stores in ports and onboard the cruise lines have in common is a captive customer group, vacationers who are relaxed and open to persuasion, encouraged to pamper themselves, and primed to spend. These tourists are likely to buy on impulse, especially in the face of bogus "discounts." They usually have little or no knowledge of the product and are making purchases based the seller's and consultant's word rather than on comparison shopping.

Here are some consumer experiences . . . .

About that bargain:

We purchased a diamond that was priced at $6000+  but was happily reduced to $3000. When we took the stone to our jeweler at home to have it appraised for insurance, it was valued at $2000.

The cruise director personally was in the store and negotiated the "absolute best price" for us. When we got home and had it appraised we found out we paid $4,000 more than it is worth!

About that appraisal:

I purchased what was represented to me as a 1 carat cushion cut tanzanite with .30 carats in diamonds set in white gold.  After I left the store I saw on the appraisal from the seller that the carat and gold had a line drawn through it and sterling silver had been written in.

About the fine print:

The fine print on the sales receipt disallows the return of any stone; however you can return the purchase for a store credit, provided you use the credit to make a purchase of twice the dollar amount.

Once they leave the port or the ship, these customers have little recourse.

The above remarks were selected from scores, probably hundreds, of complaints on Internet sites. We have no way of verifying these specific complaints. But knowledge of how the cruise ship selling machine operates, along with the experience of insurers who practice due diligence before insuring jewelry, leads us to advise extreme caution when insuring vacation jewelry in general, and cruise jewelry in particular.

 

FOR AGENTS & UNDERWRITERS

What's wrong with cruise jewelry?

 

What should the agent/underwriter do?

Ask for, and keep on file, all documents relating to the purchase. Treatments such as fracture-filling may not be disclosed on the appraisal, but they may be mentioned in boilerplate text in brochures, "certificates of authenticity," or other materials supplied by the seller. In the event of a claim, these materials may provide important information.

Ask for an appraisal written not by the seller. The best appraisals include the JISO 78/79 appraisal form, and are written by a qualified gemologist (GG, FGA+, or equivalent) who has additional insurance appraisal training. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute.

Note that "Gemologist, GIA" after an appraiser's signature is not the same as GG (Graduate Gemologist).  GG is a credential awarded to one who has completed a course of training that includes hands-on lab work, as well as study of gems. And the single word "gemologist" after the appraiser's name is not a credential at all, and it does not signify training or expertise.

Not all pieces bought on vacation are low-priced trinkets. They may be 6- or 7-figure items, even name brands.  But they might still have inflated valuations or bogus appraisals, so don't be thrown off guard.


Colored stones such as amethyst, citrine and tanzanite, are big sellers on cruises. Review our earlier issue on Vacation Jewelry, which highlights colored gems popular in tourist areas.

For all jewelry of substantial value, ask for a lab report in addition to an appraisal from a Graduate Gemologist.

These are the major trustworthy labs, and you can use these links to verify gem reports you receive.
GIA
AGL
Gübelin
AGS Report Verifcation
GCAL Certificate Search

 

FOR ADJUSTERS

Always have a damaged stone examined in a gem lab to verify its identity and quality before settling the claim.

Carefully examine all documents on file. A treatment such as fracture-filling (or clarity enhancement), which substantially lowers the value of a gem, may not be disclosed on the appraisal, but it may be mentioned in boilerplate text in brochures, "certificates of authenticity," or other materials supplied by the seller.

Disreputable or non-existent labs can say anything on a certificate and never be called to account. Avoid basing a settlement on a report from a lab you do not know to be reliable.

These are the major trustworthy labs, and you can use these links to verify reports you receive.
GIA
AGL
Gübelin
AGS Report Verifcation
GCAL Certificate Search

 

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